Any hopes of a sustained rally in the price of oil disappeared Tuesday morning as doubts were raised over an anticipated cut in production from the Organization of the Petroleum Exporting Countries (OPEC).
The oil cartel is not due to meet until June this year but a report by the Financial Times – with comments by Diezani Alison-Madueke, the Nigerian oil minister – suggested that an emergency meeting was due in the near term. This raised hopes that OPEC could cut production, something it had refused to do back at its last meeting in November 2014.
An anonymous delegate from the group denied these claims, telling Bloomberg overnight there was no emergency meeting planned. Brent crude futures dropped to 58.56 a barrel by 8:00 a.m. GMT on Tuesday and U.S. crude was back at $48.97 a barrel after climbing above $50 on Tuesday afternoon. OPEC was not immediately available for comment when contacted by CNBC.
The dramatic fall in the price of oil—which tanked as much as 60 percent from mid-June last year—has been due to weak demand, a strong dollar and booming U.S. oil production, according to the International Energy Agency (IEA). OPEC’s reluctance to cut its output has also been seen as a key reason behind the fall. The group produces about 40 percent of the world’s crude oil.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.